ALARA RESOURCES LIMITED — AGM Information 2014

Nov 18, 2014

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IAN WILLIAMS HAIRMAN 19 NOVEMBER 2014 , C PHILIP HOPKINS ANAGING DIRECTOR , M

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Agenda

Corporate Update 2014 in Review

Current Status Year Ahead Projects Update Zinc Profile Questions

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Objectives

Three key objectives:

To ensure that 1 Alara is the 2 company of choice for both investors 3 and employees alike

Remain focused and diligent on defined strategies and targets Advance plans on or ahead of schedule Seek and implement value enhancements for the Company

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Board of Directors

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Ian Williams, AO

Philip Hopkins

John Hopkins

James Phipps

Chairman

BE (Elec), FAusIMM, FIEAust

• Over 40 years’ experience in mining and resources.

• Previous management roles with Hamersley Iron, Rio Tinto, Century Zinc and Pasminco.

• Order of Australia for services to indigenous communities.

Managing Director BSc (Mining Engineering); MBA; PEng; MAusIMM; MCIM

• Over 30 years’ experience in mining and resources leadership, senior operational and project roles with BHP, Placer Dome, Falconbridge and Cominco.

• International experience in Canada, Papua New Guinea, South Africa, Brazil and Australia

Non-Executive Director B.A. (Philosophy), J.D. (Law)

Non-Executive Director LLB; FAICD

• Principal advisor to HRH Prince Abdullah bin Mosaad bin Abdulaziz Al Saud (past Alara Director)

• Over 30 years’ experience in legal and mining.

• involved in the financing and development of numerous resources projects in Australia, Africa, Asia, Europe and North America

• Co-Chairman Sheffield United Football Club, Blades Leisure Limited, chair of Shout TV, Inc.

• Director of publicly listed Saudi Paper Manufacturing Company

• Has been a Director of more than 20 public listed companies (Australia, UK and Canada)

• Experienced in corporate

• Chairman ASX listed Wolf turnarounds Minerals and Universal Coal.

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Projects Overview

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Daris/Washihi
Copper-Gold Project
OMAN
Khnaiguiyah
Zinc-Copper Project
SAUDI ARABIA
Corporate Office
PERTH, AUSTRALIA
Project Resources Ownership Location Status
Khnaiguiyah Zinc-Copper 50% (60% HoA) Saudi Arabia DFS completed
Seeking ML resolution
Washihi Copper-Gold 70% Oman Advanced Scoping Study completed
Daris Copper-Gold 50% (70% option) & identifying next steps
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Capital Structure: ASX: AUQ

Stock (AUQ)

	Issued Capital
	– OrdinaryShares(1)	242M
	– Unlisted Options(1)	17M
	Share Price(1)	$0.027
	Market Cap.(1)	$6.5M
	Cash(2)	$2.8M
	Debt	Nil

Directors’ Shareholdings[(1)]

Chairman	Ian Williams	0.1M
MD	Philip Hopkins	2.0M
Director	John Hopkins	0.2M

(1) as at 17 Nov 2014

(2) as at 30 Sep 2014

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FY 2014 in Review

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: Corporate

• Restructured Board of Directors and Management Team

• Received R & D Tax Incentive Scheme refunds totalling A$4.75m

● Moved Corporate office to West Perth

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Saudi Arabia :

• Heads of Agreement achieved for 60:40 JV arrangement with Manajem

• JV Agreements at an impasse and Project stalled

• Alternative options to progress Project explored and actioned

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Oman :

• Options Study completed

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Activities Subsequent to End of FY 2014

Corporate :

• Small Holding Share Sale implemented – reducing total number of shareholders from +2,000 to ~850 (consolidated register and reduced administration costs)

• Total number of Unlisted Options on issue reduced , via lapse and voluntary relinquishment, from ~25M (end of FY 2012) to~17M currently

• Internal restructuring and voluntary salary and fee reductions to achieve further cost savings

• HRH Prince Abdullah bin Mosaad bin Abdulaziz Al Saud, Non-Executive Director - Retired

• Mr James Phipps (HRH Prince Abdullah’s Principal Advisor) Non-Executive Director - Appointed

Saudi Arabia :

• Khnaiguiyah Project JV Partner, Manajem filed a claim against Alara with the Saudi Board of Grievances (see Slide 12 )

Oman :

• Advanced Scoping Study completed with attractive options identified

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Cash position & Forecast Expenses

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: Cash position as at 30 September 2014 A$2.8M : Forecast expenses Q2 2015 A$0.900M ( down from Q1 2015: A$.985)

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Projected monthly general base costs forecast to reduce month on month (to ~$130k/month) to the end of FY2015

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The year ahead

Corporate:

• Continue to monitor, manage and reduce costs and outgoings

• Achieve interim finance at end of the FY

• Prepare for Khnaiguiyah Project ramp up

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Saudi Arabia:

• Secure ML for Khnaiguiyah Zinc-Copper Project

• Advance the Project into Finance stage

• Prepare for Construction stage

Oman:

• Identify way forward for Daris/Washihi Project and action accordingly

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SAUDI ARABIA

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Khnaiguiyah Zinc-Copper Project

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Current Status – Saudi Arabia

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Legal Action :

• JV Partner, Manajem has filed a claim against Alara with the Saudi Board of Grievances

• Alara will file 4 specific counter claims against Manajem

• Legal Actions are not key or central to the Project’s way forward

• Manajem is struggling to retain the Mining Licence(ML) for the Khnaiguiyah Project

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Mining Licence :

• Remains in Manajem’s control and has not been transferred to the Project’s JV company

• DMMR has issued 5 successive notices to Manajem due to lack of activity on the ML

• ML has not been progressed since the DFS was announced (April 2013) - cannot remain idle indefinitely

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In-Country Support :

• Saudi Government actively supports mining and foreign investment in Saudi Arabia

• Local and regional stakeholders strongly in support of Alara and the Project

• Community and government relationships are positive and developing

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The year ahead – Saudi Arabia

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Khnaiguiyah Zinc-Copper Project Joint Venture :

• Secure ML and progress into Project financing stage

• Advance Community Relations Plan

• Prepare to ramp up the Project

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Project Finance :

• Submit Saudi Industrial Development Fund (SIDF) application

• Negotiate and secure Zinc offtake agreement

• Advance gap finance options and initiate

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Project Readiness :

• Complete DFS optimisation activities

• Secure next stage of pre-construction licences and permits

• Tender and allocate EPC contract

• Appoint Project Director and Owner’s Team

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OMAN

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Daris/Washihi Copper-Gold Project

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The year ahead – Oman

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: Daris / Washihi Copper-Gold Project way forward ● Crystallise commercial strategy for the Project and action

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• :

• Project optimisation ● Final review of toll mining / treatment option

• ● Complete optimisation studies for HMS and recovery

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• :

• If retention strategy adopted ● Secure interim finance ● Commence Definitive Feasibility Study

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Zinc
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Zinc - Usage

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Demand & usage
allocation may change:
•
New on-line
galvanising
•
High yield fertiliser
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Zinc – Khnaiguiyah Project Modelled at US$1.05/lb

Historic market deficit resulted in the Zinc price rising to >US$2.00/lb (2006) *

Brook Hunt forecasts Zinc to rise to US$1.24/lb this year and climb steadily thereafter

Wood Mackenzie forecasts average Zinc price of US$1.59/lb 2016-18

Glencore forecasts Zinc price of US$1.59 – $1.81/lb in the next 3 years

CRU forecasts Zinc price reaching US$2.00/lb by 2016/2017

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600 1.6
kT Price USD/lb
400 1.4
200 1.2
0 1
‐200 0.8
‐400 0.6
‐600 0.4
‐800 0.2
‐1000 0
Surplus/Deficit (kT) Nominal LME
Cash Prices (USD/lb)
Source: McLeod Williams
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 F 2015 F 2016 F
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*Zinc deficit in 2006 ($2.00/lb) was half the forecast deficit predicted for 2016/17

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In Summary

• 2 Mtpa* Robust Zinc/Copper project in Saudi Arabia

• Focus on securing ML within JV to move the Project forward

• Striving to resolve impasse with JV partner

• Ready to finance and move toward construction

• De-risking and exploring upsides for the Project

• 0.5 Mtpa** Open Copper/Gold project in Oman

• Positive Advanced Scoping Study completed

• Proposals to enter DFS are being reviewed

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• Positive relationships with JV partners

• Actively progressing the most appropriate options for the advancing the Project

• Refer Alara’s ASX market announcement dated 30 April 2013 entitled “Positive Definitive Feasibility Study Confirms Khnaiguiyah Project as Technically and Financially Robust.” All material assumptions underpinning the Khnaiguiyah DFS continue to apply and have not materially changed .

Alara confirms that all material assumptions underpinning (the production targets and forecast financial information derived from production targets under) the Daris/Washihi Advanced Scoping Study (refer Alara’s ASX announcement dated 14 October 2014 entitled “ Oman Project Update: Positive Advanced Scoping Study Outcomes** ”) continue to apply and have not materially changed. The Study is based on low level technical and economic assessments and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Study will be realised. The mining inventory under the Study is partly based on Inferred Resources (42.3% under the Base Case and 41.3% under the Enhanced Base Case) and an Exploration Target (2.3% under the Enhanced Base Case). The mining process schedule assumes the following approximate relative sequence – in Years 1 and 2 (Washihi Indicated Resource and Mullaq Exploration Target), Years 3 and 4 (Washihi Indicated and Inferred Resources), Year 5 (Washihi Indicated and Inferred Resources and Daris-East Indicated and Inferred Resources), Year 6 (Washihi Indicated and Inferred Resources) and Years 7 to 9 (Washihi Inferred Resources, included stockpiled material after Year 7). There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration will result in the conversion of Inferred Mineral Resources to Indicated Mineral Resources or that the production target (under the Study) will be realised. The potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a JORC Mineral Resource and there is no certainty that further exploration work will result in the determination of JORC Mineral Resources or that the production target itself (under the Study) will be realised.

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Question Time

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ABN : 27 122 892 719 Level 3, 35 Havelock Street, West Perth WA 6005 Telephone +61 8 6323 5900 I Facsimile +61 8 6323 5999 ASX Code: AUQ info@alararesources.com I www.alararesources.com www.alararesources.com 20

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Disclaimer and Statements

FORWARD LOOKING STATEMENTS

This Presentation has been prepared as a summary only and does not contain all information about the Company’s assets and liabilities, financial position and performance, profits and losses, prospects and rights and liabilities. The information in this Presentation and made to you verbally is subject to updating, completion, revision, further verification and amendment without notice. The information contained in this Presentation or subsequently provided to the Recipient of this Presentation whether orally or in writing by or on behalf of Alara Resources Limited or its respective vendors, employees, agents or consultants ("Information") is provided to the Recipients on the terms and conditions set out in this notice. The purpose of this Presentation is to provide Recipients with Information relating to Alara Resources Limited. The Presentation has been prepared by Alara Resources Limited and each Recipient must make his/her own independent assessment and investigation of Alara Resources Limited and its business and assets and should not rely on any statement or the adequacy and accuracy of any Information contained in this Presentation. Alara Resources Limited makes no representation or warranty (express or implied) as to the accuracy, reliability or completeness of the Information. Alara Resources Limited and its respective directors, vendors, employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (express or implied) arising out of, contained in or derived from, or for any omissions from the Presentation, except liability under statue that cannot be excluded. The Presentation contains reference to certain intentions, expectations and plans of Alara Resources Limited. These intentions, expectations and plans may or may not be achieved. They are based on certain assumptions which may not be met or on which views may differ. The performance and operations of Alara Resources Limited may be influenced by a number of factors, many of which are outside the control of Alara Resources Limited. No representation or warranty, express or implied, is made by Alara Resources Limited or any of its respective directors, officers, employees, advisers or agents that any intentions, expectations or plans will be achieved either totally or partially or that any particular rate of return will be achieved. This Presentation does not constitute in any way an offer or invitation to subscribe for securities in Alara Resources Limited pursuant to the Corporations Act.

OMAN ADVANCED SCOPING STUDY – JORC CODE and ASX COMPLIANCE

Alara confirms that all material assumptions underpinning (the production targets and forecast financial information derived from production targets under) the Daris/Washihi Advanced Scoping Study (refer Alara’s ASX announcement dated 14 October 2014 entitled “ Oman Project Update: Positive Advanced Scoping Study Outcomes ”) continue to apply and have not materially changed. The Study is based on low level technical and economic assessments and is insufficient to support estimation of Ore Reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Study will be realised. The mining inventory under the Study is partly based on Inferred Resources (42.3% under the Base Case and 41.3% under the Enhanced Base Case) and an Exploration Target (2.3% under the Enhanced Base Case). The mining process schedule assumes the following approximate relative sequence – in Years 1 and 2 (Washihi Indicated Resource and Mullaq Exploration Target), Years 3 and 4 (Washihi Indicated and Inferred Resources), Year 5 (Washihi Indicated and Inferred Resources and Daris-East Indicated and Inferred Resources), Year 6 (Washihi Indicated and Inferred Resources) and Years 7 to 9 (Washihi Inferred Resources, included stockpiled material after Year 7). There is a lower level of geological confidence associated with Inferred Mineral Resources and there is no certainty that further exploration will result in the conversion of Inferred Mineral Resources to Indicated Mineral Resources or that the production target (under the Study) will be realised. The potential quantity and grade of an Exploration Target is conceptual in nature, there has been insufficient exploration to determine a JORC Mineral Resource and there is no certainty that further exploration work will result in the determination of JORC Mineral Resources or that the production target itself (under the Study) will be realised.

© Alara Resources Limited

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